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Showing results for tags 'insolvency'.
So April 15th is right around the corner and if you're like me, you're waiting until the last minute to file. I'm in process of gathering up everything I need and it just so happens I received a 1099-C this year for cancelled debt from an original creditor. Now I'm not complaining that I received it - I walked away from a pretty decent amount of credit card debt several years ago and was only sued on one account by a JDB (dismissed) - after all that if all I have to deal with is a some extra tax liability, I'm okay wit it. I'd much rather give the IRS some money than some scumbag JDB. That being said... the IRS does allow some exceptions for cancelled debt and it's worth looking into, you never know you might not have to pay that little extra in tax liability. I don't know too much about this yet, but I'm starting this thread because I'm going to be looking into it over the next few days and maybe some us will benefit from it. There are some threads where members have mentioned having done this successfully, but that info is scattered around, thought we could use a resource. So far what I understand is that if a person was insolvent (amount of their liabilities exceeded the amount of their assets) at the time immediately before the cancellation, then the 1099-C amount may be be excluded, entirely or partially, from their income. Relevant info and examples here: http://www.irs.gov/publications/p4681/index.html#en_US_2014_publink1000192043 IRS Form 982 and instructions Will follow up once I learn more.